Most academic training programs don’t include the nuts-and-bolts of practice management, so the group or partner you join will be instrumental in providing this on-the-job training. Are they up to the task?

AAOS Now

Published 5/1/2007
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Andrew M. Wong, MD; Brian J. Hartigan, MD

Once bitten, twice shy: Choosing the right practice the first time

Did you know that up to half of new orthopaedic surgeons will change their practice situation within the first two years? During an average career, ortho-paedists may change practices two or three times.

Although changing a practice is common, it’s also costly in terms of money, marital and family stress, professional productivity, and personal satisfaction. Relocating within the first two years of practice can also have an effect on Board certification because the American Board of Orthopaedic Surgery requires 22 consecutive months in the same practice area in order to sit for the Board exam.

If you’re looking for a new practice opportunity, here are seven key issues to consider.

1. Sustainability is the key
High income guarantees and signing bonuses are certainly attractive—particularly when they reach seven figures or more. The question to ask is “how long will this last?” Up-front money doesn’t necessarily reflect the long-term marketplace. The real indicator is how much you’ll be earning five or more years into the practice.

Is the practice located in a growing area with an expanding patient base or will you be competing with your partners for the same patients in a stagnant market? Are other competing groups growing faster and bringing in more orthopaedists? Do the patient demographics support your subspecialty? For example, a community with a large Medicare population is not going to help a fellowship-trained sports orthopaedist flourish. The median income for an orthopaedist in the United States is $320,000; guarantees of two or three times that figure need to be examined closely.

2. Know your group
Orthopaedists who relocate frequently mention two reasons: dissatisfaction with their partners and unhappiness with practice development. Joining another individual or group is very much like marriage. If you differ philosophically on core, fundamental values and issues, the relationship is doomed to failure. Therefore, you need to understand the practice and business philosophy of the people you’re joining. Are finances the overriding concern or is the focus on quality of patient care? How does family and personal time fit in with their professional goals? Are your partners well-respected within the medical community as well as the community at large?

Answering these questions will require multiple conversations with your prospective partners. Don’t try to do it all in a single interview visit. Plan on calling the partners several times to discuss these issues.

You should also call the hospital and speak with operating room personnel, floor nursing staff, physical therapists, and administrators to get a feel for your potential partners’ reputations and behaviors. How do they treat co-workers and allied health personnel? Do they interact well with patients and their family members? Do they respond to pages promptly and courteously? Consider calling some primary care providers in the community and see where they refer their orthopaedic care.

Your state orthopaedic society can also be an excellent resource. Interacting with colleagues in social settings can facilitate candid discussions about prospective groups. Orthopaedists within the same community may provide some insight or history about your future partners and their practice habits.

Always speak to former partners. The history of turnover within a group may be the most accurate predictor of professional satisfaction. The group should be willing to explain the circumstances behind the departure of a previous member and possibly provide you with contact information. Remember, there are always two sides to every story; be sure you hear both sides. People often leave groups very amicably and with very legitimate issues.

Finally, don’t think that you will be the exception to the rule. Don’t make location so important that you are willing to overlook some negative aspects of a practice. You may think you can make it work where others failed, but this is usually a naïve and idealistic approach. It’s doubtful that you can change ingrained behaviors and values.

3. Is there a mentor in the house?
Although all orthopaedic surgeons are bright, energetic, and well-trained, there is still no substitute for experience—especially when it comes to starting a practice. Most academic training programs don’t include the nuts-and-bolts of practice management. So the group or partner you join will be instrumental in providing this on-the-job training. Are they up to the task? Do they have the appropriate staff to help you with correct coding and billing? Will they help you learn how to manage personnel properly? If they’re not particularly good at business-related issues, do they have a practice manager or CEO who is?

A good group will provide the necessary business/practice mentoring and serve as your professional mentor. There will always be difficult cases; are they willing to change their schedule and/or lose some financial productivity to help you? If you are weak in one area, will they help you improve your skills? If you’ve done a fellowship, will they refer patients to you even if it means some loss of production for them?

This last point is very important. General orthopaedics and subspecialty training can overlap, particularly in the areas of total joints, arthroscopy, and fracture care. If your fellowship overlaps with your partners’ areas of practice, will they help you develop a subspecialty practice? The average consumer doesn’t appreciate the difference between a fellowship-trained and non-fellowship-trained orthopaedist, so very often the distinction will only be made by your partners and other orthopaedists who refer to you. Make sure the group you join is committed to this principle.

4. Are you in the room yet?
When you join a practice, you assume that they need your services. But has the practice considered what you’ll need to operate (literally!)? Many hospitals use block booking for their operating rooms (OR) and few blocks remain for new surgeons—usually at the least desirable times. In outpatient surgery centers, preference is usually given to surgeons with the highest volumes and most seniority.

As an incoming surgeon, make sure the practice has planned for your arrival and secured both OR time and office time as needed. Also make sure that you’ll have adequate office space within the practice.

5. Ancillaries are great, but can you afford them?
Ancillary services—radiology imaging modalities, surgery centers, and physical therapy—are both common and increasingly important as surgical reimbursements decline. But they are not guaranteed income; some investments take years to turn a profit. It all depends on volume and insurance contracting.

If a practice is going to invest in an ancillary service, will there be a sufficient volume of work for it to break even? More importantly, will local insurance plan arrangements allow the practice to use the ancillary? Will the practice be able to contract services at profitable rates?

One multispecialty group had its own surgery center but none of the insurers would cover the cost of implants there. So the partners couldn’t schedule procedures such as Bankart repairs, arthroscopic rotator cuff repairs, or external fixation of wrist fractures at the surgery center. Their utilization was only a fraction of its potential and their income was only a fraction as well.

6. The partnership track
Although you may initially be hired as an employee, you probably hope to eventually become a partner. The distinctions between “employee” and “partner” are important.

Employees have less opportunity to participate in decision-making, but also bear less responsibility and risk. Employees typically receive a guaranteed salary with productivity bonuses, which can be advantageous while you build your practice. Take a close look at the formula used to determine your bonus. If your bonus depends solely on your collections, ensure that you are seeing the same number of patients and have a similar payer mix as the rest of the practice.

Carefully evaluate how you will make the transition from employee to partner before you join a group. The decision to “offer” you a partnership is determined by the partners that own the practice and can be based on time, productivity, or a combination of the two. You should understand and be comfortable with the formula. You should also understand the cost of becoming a partner, because you will typically be required to “buy into” the practice once you accept the offer. Your cost should be based on your percentage of ownership of the group’s assets, such as office space, office supplies, imaging equipment, and ancillaries. Be cautious of pricey buy-ins based on “goodwill” to the senior partners; it’s usually not worth the cost.

If you are hired as a partner, you will be more involved in decision-making and more at risk. Because a partner’s compensation is typically determined by collections minus a share of the overhead, you may have several months of little-to-no income while you build your practice and wait for your collections. If you are offered a loan to help you during this time, remember that you can accumulate a significant debt as you relocate and attempt to establish a new life in a new location. Be aware of the loan terms and your ability to repay.

7. It’s time to retire.
At this stage in your life, retirement is probably the last thing on your mind. But it really should be an important issue as you research your future practice. A recent survey of alumni from one medical school found that less than half of the respondents had a group retirement plan.

Retirement can raise several unanticipated financial and practice disagreements that could jeopardize the cohesion of the group. For example, does “retirement” mean no practice at all or just no surgery? What happens to overhead arrangements if a partner becomes an office orthopaedist? Does the practice have the space to allow someone to become an office orthopedist when a full production orthopedist who can help take call is needed? What happens to ancillary income? Is it tied to a practice requirement or time-limited? Can a partner who’s demonstrating some loss of surgical skill be “forced” to retire?

For more information on evaluating practice opportunities, refer to the February and April 2006 issues of the AAOS Bulletin, available at www.aaos.org/now. Click on AAOS Bulletin archives on the right navigation bar.

Andrew M. Wong, MD, is chair of the Member Communications Oversight Group. Brian J. Hartigan, MD, is a clinical assistant professor at Northwestern University.